For retailers, the acceptance of electronic payments comes with an expense not linked to check or cash payments—an interchange fee, which is a percentage of the sale paid by the vendor as transactions are processed. While most know that the prices of services and goods typically include these fees, processors continually work with suppliers to keep costs down via level 3 credit card data. When suppliers gather and use this data during payments, they will see lower interchange fees.
Depending on processing methods, which may be determined by POS (point of sale) devices used by suppliers, card processing may include three data levels with each transaction. These levels are defined by the amount of information needed to complete payment, with Level 1 requiring the lowest level and Level 3 requiring the most information. Level 3 data is particularly important to suppliers, as it ensures that they pay the lowest possible fees on card transactions. For processors, this data can help maintain a good supplier/client relationship by providing suppliers with the incentive to accept electronic payments.
The Basics of Level 3 Credit Card Data
Level 3 card data is similar to data found on itemized invoices for business-to-business transactions. The supplier enters data into the point-of-sale system before the transaction goes through the payment system for processing and eventual settlement.
Here, level 3 credit card data includes the standard info associated with transactions, such as the merchant’s name, date and transaction amount, along with the following:
- Tax amount
- Order number
- Invoice number
- Product code
- Product description
- Commodity code
- Quantity purchased
- The product’s measurement unit
- Extended amount
With level 3 data, the difference in processing and interchange fee savings lies in the transaction’s details. Consult a processor for more information on level 3 data and associated savings.
Savings for Suppliers
Level 3 data processing offers more in-depth information on transactions, which the issuer sends to the buying entity. The most important reason for sellers to use this data is that interchange fees paid on electronic transactions can be significantly reduced. When transactions are large, as seen in business-to-business sales, the supplier’s savings can increase when line item details or level 3 data is provided.
It is up to the individual organization to decide whether the additional attention to detail is worthwhile. From the payment ecosystem’s perspective, and for what it means in terms of overall cost to suppliers, using level 3 credit card data is justified. Passing along level 3 data can offer suppliers significant financial opportunities when they accept corporate or P-cards.
Benefits for Buying Entities
While level 3 data holds big benefits for sellers, it can help buying organizations as well. With this data included in a transaction, buyers can recognize transaction details with a higher level of clarity. When the transaction clears the issuer’s payment solution on the buyer’s end, it can easily be coded and allocated, particularly when multiple transactions of similar amounts are on a single payment.
Obstacles to the Use of Level 3 Credit Card Data
Historically, there are roadblocks for suppliers who wish to offer level 3 data for their transactions. The most apparent obstacle is that terminals do not ask for more data—and if they did ask, the customer would have to enter letters via a numeric pad. What this means is that a supplier wishing to supply level 3 data to receive savings must input transaction info from a system that uses software which prompts them for the necessary information.
Controlling Level 3 Data Access
Today’s payment processors offer multiple ways for suppliers to take advantage of the benefits of payments including level 3 data. These methods include:
- EC-Pay platform: This platform for buying entities uses traditional card processing networks to send payments directly to the supplier’s bank account, with no additional action required on the supplier’s part. Suppliers don’t necessarily have to be set up to take electronic payments, and the EC-Pay system automatically sends level 3 data with every payment. Therefore, the supplier is automatically qualified to take advantage of low interchange fees.
- WorkSuite Payment Gateway: This SAAS (software as a service) merchant payment gateway can handle real-time, file-based and browser-based processing or any combination thereof. Supported processors are First Data, Elavon, WorldPay, Vantiv and others. When a merchant uses the WorkSuite gateway, they automatically get level 3 data and they save significantly on interchange charges.
Payment processors must strike a compromise between security, efficiency and saving money. Level 3 data can reduce processing fees, and, as shown above, increase the per-transaction data for organizing and parsing. It may seem time-consuming and tedious to plan and implement level 3 processing, but there are many ways to simplify the process, such as retaining buyers’ information for future use. Setup is also made simpler by the fact that reputable payment processors have solutions that are fully compatible with every major processing platform.